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Shareholder’s Guide / 2 016 Iberdrola Tower / Bilbao Shareholder’s Guide / General Shareholders’ Meeting 2 016 Sustainable Event Certificate ISO 20121 / AENOR Erronka Garbia certificate for environmental sustainability of events / Basque Government Contents Letter from the chairman 6 Iberdrola’s Board of Directors 8 Shareholder Week 56 1. Shareholder Day Schedule of Activities 58 2. Place of the Meeting and Access Points 60 3. Participation in Shareholder Day 60 4. Additional Informationl 61 Iberdrola General Shareholders’ Meeting 62 Agenda for the General Shareholders’ Meeting 65 Frequently asked questions and information of interest regarding the General Shareholders’ meeting 68 1. Documentation made Available to the Shareholders 70 2. Items on the Agenda relating to Approval of the Annual Accounts, the Management of the Company, and the Re-election of the Auditor 72 3. Items on the Agenda relating to Shareholder Remuneration 73 4. Item on the Agenda relating to the Composition of the Board of Directors 75 5. Items on the Agenda relating to the Modification of the Corporate Governance System 77 6. Item on the Agenda relating to the Reduction in Capital 77 7. Item on the Agenda relating to the Delegation of Powers to Formalise and Implement the Resolutions adopted by the Shareholders acting at the General Shareholders’ Meeting 78 8. Item on the Agenda relating to the Consultative vote regarding the Annual Director Remuneration Report for financial year 2015 78 9. Right to Receive Information prior to the General Shareholders’ Meeting 78 10. Attendance, Proxy Representation, and Absentee Voting 79 11. Presentations and Voting 83 12. Proclamation and Publication of the Results 84 13. Attendance Bonus and Gift for Shareholders 85 14. Sustainable Event 85 15. Guarantees and Additional Information for Shareholders 86 16. Information for Holders of ADRs and CDIs 89 17. Information for Institutional Investors and Proxy Advisors 90 18. Instructions for Filling Out the Attendance, Proxy, and Absentee Voting Cards 90 More information and key dates 92 1. Investor Relations App 94 2. More Information on the Items of the Agenda 94 3. Annual Reports and Complementary Documentation regarding the Iberdrola Group 95 4. Key Upcoming Dates 96 5. Commitment to Continuous Improvement 96 6. On-Line Shareholders (OLS) 96 7. Sustainable Event 97 Letter from the Chairman 6 Letter from the chairman Ignacio Galán Chairman of the Board of Directors & CEO of IBERDROLA, S.A. © Rafael Sámano / Shareholder’s Guide / 2016 7 Letter from the Chairman “We look after our more than 600,000 shareholders and involve them in our corporate life, and we constantly improve on our leadership at corporate governance and transparency” Last year, Iberdrola approved its Shareholder Engagement Policy, which marked an important milestone in the evolution of our relations with all of you. The company has become the first electricity company, of the ten largest in the world by stock market capitalisation, that has approved an engagement policy with which our shareholders strengthen their rights and their involvement in the company through new channels of participation and a constructive, ongoing, and effective two-way dialogue. In sum, we have further embraced the links with our almost 600,000 shareholders throughout the world, who are at the centre of our strategy and our Corporate Governance System. The policy, which is one of the fundamental cornerstones of our corporate governance strategy, further develops the idea behind our Vision: “we want to be the leading multinational group in the energy sector at the forefront of a better future, sustainably creating value with a quality service for people: customers, citizens and shareholders (who we care for and involve in our corporate life)”. We have been making a tremendous effort in the past years to constantly improve on issues of corporate governance, ethics, and transparency, which puts us at the forefront of best international practices and has led to our being recognised and awarded by prestigious global organisations. As a sign of our commitment to corporate social responsibility, we will also be the first electric company from among the ten largest in the world, to be accredited for compliance with the ISO 20121 standard for sustainable event management at our 2016 General Meeting. For purposes of the meeting, we will be holding the second edition of Shareholder Day, which will be preceded by a series of events organised around what we call Shareholder Week. The goal of these activities is to strengthen the significance of all of you in our history of success and for you to be able to continue deepening your knowledge of the great company that Iberdrola is today. In this Shareholder’s Guide, with which the Board of Directors wants to promote your attendance and informed participation at the General Meeting, you will find the more significant aspects regarding the operation thereof as well as your rights linked to the holding of such Meeting. I would like to thank you once again for your support and confidence, and to reiterate Iberdrola’s commitment to a sustainable business model, with people at the centre of all decisions, that seeks to create long-term value for all of you, our shareholders, and for all of society. Shareholder’s Guide 2016 / Iberdrola’s Board of Directors 8 Iberdrola’s Board of Directors / Shareholder’s Guide / 2016 9 Iberdrola’s Board of Directors Iberdrola’s Board of Directors © Rafael Sámano The Board of Directors of IBERDROLA, S.A. (“Iberdrola” or the “Company”) is responsible for ensuring and facilitating the orderly conduct of the General Shareholders’ Meeting, and for such purposes makes available to the shareholders this Shareholder’s Guide, which clearly explains the most significant aspects regarding the operation thereof and the procedures established for the exercise of their rights at the General Shareholders’ Meeting. The members of the Board of Directors make up the Presiding Committee (Mesa) of the General Shareholders’ Meeting. In particular, the chairman and the secretary of the Board of Directors shall perform the duties of chairman of and secretary for the General Shareholders’ Meeting, respectively. The composition of Iberdrola’s Board of Directors conforms to the needs of the various businesses and markets in which the group operates. Iberdrola’s directors are selected in accordance with a Director Candidate Selection Policy that is public, specific, and verifiable, and which sets out a wide range of criteria, including their professional qualifications, experience, origin, availability, and personal qualities. The result of this selection of candidates is a balanced Board of Directors, made up of a large majority of independent directors, with high qualifications and ample professional experience and a broad diversity in terms of expertise, origin, and gender. The foregoing, together with the high-level dedication required of its members, ensures the effective functioning of this body. Shareholder’s Guide 2016 / Iberdrola’s Board of Directors 10 Distinctive Features of the Board of Directors The Board of Directors has identified a number of features that their members must represent, in light of the current and future characteristics and needs of the business: / Shareholder’s Guide / 2016 11 Iberdrola’s Board of Directors Administration / Senior Management / Resource Management 79 % (11 of 14 directors) Significant dimension of the Company (the largest electricity company in Europe by stock market capitalization) with relevant presence in various geographic zones and businesses through a multinational group of companies. Accounting Management / Financial / Risk Management 71 % (10 of 14 directors) Activities carried out in an environment of regulatory and accounting standard changes with a high impact on the financial statements. Responsibility of the Board for supervising the management of risks. Energy Sector / Technical / Corporate Governance 86 % (12 of 14 directors) Conduct of various activities in the energy industry, each of a highly different nature (regulated vs liberalised), financed through aninternational shareholder base that is broadly spread. Responsibility of the Board for corporate governance policies. Commercial / International / Principal Markets 79 % (11 of 14 directors) Presence in multiple countries, with exposure primarily concentrated in five large geographic areas in the Atlantic axis: Spain, the United Kingdom, the United States, Mexico, and Brazil. Institutional / Governmental / legal 64 % (9 of 14 directors) High significance of relations with institutions, especially government entities, due to the greater weight of regulated businesses. Remuneration / SRC / Management of People 71 % (10 of 14 directors) Responsibility of the Board remuneration, selection and corporate social responsibility (CSR) policies. * As of 11 December 2015 Shareholder’s Guide 2016 / Iberdrola’s Board of Directors 12 Structure and Independence of the Board of Directors All members of Iberdrola’s Board of Directors are external directors, except for the chairman, who is an executive director. / Shareholder’s Guide / 2016 13 Iberdrola’s Board of Directors Classes of Directors Executive: 1 Independent : 9 Proprietary: 1 Other external: 3 Consultative committees of the Board of Directors Audit and Risk Supervision Committee: 3 Appointments Committee: 3 Remuneration Committee: 3 Corporate Social Responsibility Committee: 3 The independent director Inés Macho Stadler chairs